Date: Janurary 4, 1999
To: moving@avatar-moving.com
From: "Thomas Madden" <tommadd@hotmail.com>
Subject: AMS-Forum Compensation suggesstion
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[ Return To The Hall of Fame ]When the subject of sales compensation comes to mind, I prefer to think in terms of positive - and negative - incentives. I mean rewards to the sales reps for securing business that fits my definition of the most profitable and practical business products that I offer to the moving public. If local permanent storage produces overhead paying cash flow, then I am greatly interested in a continuing an influx of local permanent storage. Thusly, I am willing to offer a positive incentive to my sales reps for bringing in that beneficial business.
Example: years ago I worked for a firm which offered the entire first and sixth month's storage payment to the sale rep who brought in any long-term local permanent storage account. I always sought out local storage accounts in a serious manner. Perm Stg booked gave the company and me both positive rewards for servicing this desirable business.
This same former employer decided that military line haul business was unrewarding at best. My compensation for surveying this class of customer was cut to 1/6th of my normal commission. Result, I could go through a military survey generally in 15 minutes. In other words, I reacted in a minimally positive manner to a negative incentive - I could make more doing something more profitable to both of us.
I believe that this type of compensation scheme is the natural effect of operating a business for profit. Reward the extremely profitable business mix and minimize exposure to the disadvantageous busy work. Likewise, I prefer to point my sales rep's talents by offering them greater compensation for more profitable work and less for poorer business.
Each individual shop has to ultimately decide what methodology to employ in instigating this sort of plan, if it makes sense. I believe it is the first step on the road to the restoration of common sense in the individual agency. It does not require van line approval. It does not require rewriting the tariffs. It only requires identification of the type of business that I want to do, to spend my time and energies in pursuit of, and the proportion of the gross income for that profitable mix that I am willing to share with the magnets that attract that business to my company.
Tom Madden
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